G.R. No. 135802 ; March 3, 2000
PRISCILLA L. TAN, petitioner, vs. NORTHWEST AIRLINES, INC., respondent.

FACTS

Petitioner Priscilla L. Tan boarded Northwest Airlines Flight 29 from Chicago to the Philippines on May 31, 1994. Upon arrival at NAIA on June 1, 1994, she discovered her checked-in baggage was missing. The baggages were delivered on June 3, 1994, but in a damaged and soiled condition. Northwest Airlines explained that the baggages were off-loaded in Chicago due to “weight and balance restrictions” for flight safety and were placed on the next available flight, which arrived on June 2, 1994. The airline offered to reimburse repair or replacement costs. Tan demanded compensation for mental anguish and damages, and after no response, filed a complaint for breach of contract of carriage.
The Regional Trial Court ruled in Tan’s favor, awarding actual, moral, and exemplary damages plus attorney’s fees. The Court of Appeals modified this decision by deleting the awards for moral and exemplary damages and reducing attorney’s fees, finding no willful misconduct on the part of the airline. Tan elevated the case to the Supreme Court via certiorari, contesting the deletion of the moral and exemplary damages.

ISSUE

Whether respondent Northwest Airlines, Inc. is liable for moral and exemplary damages arising from willful misconduct and breach of contract of air carriage.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the airline was not liable for moral and exemplary damages because there was no showing of willful misconduct or bad faith. Willful misconduct requires a conscious intent to violate the law or a persistent disregard of the passenger’s rights, evidenced by flagrantly wrong conduct. The airline’s action of off-loading the baggage was due to legitimate weight and balance restrictions, a critical safety measure for air travel. While this constituted a breach of the contract of carriage for failing to deliver the baggage on the same flight, the breach was not attended by fraud, malice, or dishonest purpose.
The Court emphasized that liability for damages arising from a breach of contract is generally limited to the natural and probable consequences foreseeable by the parties at the time the obligation was constituted. Moral and exemplary damages are not recoverable in breach of contract cases unless the defendant acted fraudulently or in bad faith. Since the airline’s conduct was motivated by safety concerns and not by any ill will, the breach did not rise to the level of willful misconduct necessary to justify an award of moral and exemplary damages. Consequently, only actual damages and nominal attorney’s fees, as modified by the Court of Appeals, were deemed appropriate.